Tuesday, October 1, 2013

Jeff Blackman's Results Report September 2013

This is an excerpt from Jeff Blackman's Results Report (subscribe to his report below)

One of the great joys of writing The Results Report, is folks recommend to me new sources of content. Smart people I never knew, but quickly learn, their message, beliefs and perspectives will be of great benefit to you, my valued and loyal reader.

That's how Bill Burnett and I found each other. He's the author of: Advantage: Business Competition in the New Normal, Behave! How to Get 100% of Your Workers Fully Engaged and The Peak Interview: New Insights into Winning the Interview and Getting the Job.

What I think you'll especially enjoy, is Bill's insights and opinions will force you to think. You may agree with him. Yet, you may also vehemently disagree.

You may consider some of Bill's declarations disruptive or controversial. They may even make you squirm. That's okay. Because one of the goals of this e-zine, is to help you imagine "other ways" or "what if" possibilities. Heck, to delight in disruption!

Here are excerpts from our conversation.

Jeff Blackman: How does a company become a competitive powerhouse?

Bill Burnett: Create a monopoly! As bad as that sounds, it works. It’s perhaps the best way to become a competitive powerhouse and a strategy lots of companies have pursued.

You can do it by carving out a market presence others will be unable to challenge. In some respects that's what Microsoft has done. They've locked us into their solutions by being the gatekeeper to products running on your PC.

You can also create a monopoly with unique intellectual property. Polaroid cameras, at one time, enjoyed that kind of a monopoly. Or you can become iconic. The Barbie Doll carved out a monopoly in, well, Barbie Dolls!

You can also be better than your competition. That's what Google did to Yahoo and other search engines. It's what Pixar did with animation and great story telling. What W. L. Gore has done to guitar strings by coating them with microscopically thin, advanced polymer tube coatings. Now they own the biggest share, (35%), of the guitar string market.

Alternatively, companies become competitive powerhouses by providing higher quality at a lower cost. We often think of Henry Ford inventing the assembly line to drive down the cost of the automobile to make them affordable. However, all that automation was done earlier by Colt. They turned the pistol industry upside down by dominating manufacturing through an assembly line of interchangeable parts. Prior to that, every gun was uniquely constructed with unique hand-crafted parts.

You can also become a competitive powerhouse by changing the sales model. Zappos did it for shoes. Amazon for books. eBay for garage sales. Historically, and unfortunately, some take the "monopoly" idea too far. You can strong-arm your way into a monopoly. Grease the right palms in the government and suddenly you're the winner of a no-bid government contract supporting a war. Or 'take-out' the competition as some drug lords have done. Or buy-up all competitors.

Innovation also plays a big role in sustaining a competitive advantage. And another big factor, is how you interact with customers. Both innovation and how you treat customers depend upon your people. Every individual in your company plays a role.

JB: How does an individual become a competitive powerhouse?

BB: Ironically, for most people, you become a competitive powerhouse by not being an individual. For companies, teams provide more value. The lone inventor model is mostly a myth. The best way to sustain competitive advantage is through innovation. In the end, every idea comes out of a single brain. However, innovation improves by having lots of brains in the room exchanging knowledge.

That gives you lots more dots from which connections can be made. Those connections may pop out of any one of the brains in the room. Useful insights can come from unlikely places. We hold up certain people as great inventors, guys like Thomas Edison. But he wasn't alone. He used teams of people who could think and build. He leveraged their brainpower.

JB: What role does innovation then play in success? How is it attained? Communicated? Leveraged?

BB: We often think about innovation as some BIG idea, like Scotch Tape, or iTunes + iPod, or the Internet. However, the real source of competitive advantage is lots of little innovations. In mature industries the companies that have vastly superior operating margins get there through innovation. At the famous Toyota/GM joint venture NUMMI assembly plant, the line workers implemented about 10,000 little innovations every year. Their operating margin surpassed other assembly plants in the U.S. by a large margin.

What often happens in companies that get very innovative, is the first round of ideas usually focus on "faster, cheaper, better." They're all about becoming better at what we do for current customers. The next round of ideas expands into other problems our current customers face and we create new products and services to meet those needs. Finally, the third round of ideas creates new products for new customer and segments. And of course, innovation thrives when all three rounds happen all the time.

Jeff Blackman: You say, "Useful insights can come from unlikely places.” So where should leaders look for those insights?

BB: Everywhere! You never know which brain is going to synthesize the great idea. I remember leading a five-day meeting where we were tasked with redesigning one of the company's core pieces of technology. At the end of the second day, we reached an impasse. Then this shy, quiet, very agreeable, Pakistani gentleman from the Dubai business approached me with an idea. It changed our business model and drove $2 billion in incremental sales every year thereafter.

On another occasion, while traveling in Latin America, someone made a suggestion. At the time I thought, "This person doesn't have a clue.” Three weeks later, I'm sitting at my desk, when it hits me, "What a brilliant insight!" She'd seen the problem from a different perspective. It was beyond my blinders. She was a great synthesizer.

Since then, I've always encouraged leaders to put people in positions where they must participate in the discussion. Don't let the shy, quiet person or the seemingly arrogant person who's got what Robert Galvin, former longtime Motorola CEO called, "The Minority Report" off the hook, or they'll leave the room with the best idea.

JB: Tell me more about the significance/impact of “synthesis.”

BB: We create new knowledge in three ways:

1: Discovery: We stumble upon something and it dawns on us how this discovery might be valuable.

2. Experimentation: We have some notion of what the root cause of a problem is and we try all kinds of solutions until we find one that works.

3. Synthesis: It's the most common way we innovate. It's simply the ability to take a bit of knowledge from here, and another from way over there, and somehow combine them to create new knowledge. This happens in our brains and we all do it.

I'll use charcoal as an example for all three.

Charcoal was originally "discovered" to burn hotter than wood. You could use it to melt metals. That made it valuable. People who wanted to sell charcoal began experimenting to find better ways to refine charcoal from wood. But there's a problem of waste in the bottom of the kiln after the refining process is complete. Lots of tiny bits of charcoal line the bottom of the refining kiln after every burn. These were too small to sell so they were thrown away.

Yet not wanting to waste this fuel, Henry Ford "synthesized" a solution. He knew from the paper industry that starches can bind fibers. He also knew that in its near pure carbon form, charcoal retains its fibrous nature. He simply made a starch slurry mixed in the bits of charcoal, formed them into balls, let them dry, and called them briquettes. The company he formed was Kingsford, now owned by Clorox.

Everyone synthesizes, but some people are really good at it and we call them "supersynthesizers."

JB: What/who's a "Supersynthesizer?"

BB: A supersynthesizer connects distant dots. Examples are physicists like Albert Einstein and Richard Feynman. But lots of computer programmers, scientists or businesspeople are also supersynthesizers. James March, professor emeritus at Stanford studied these people for years. While anyone can be a supersynthesizer, according to March, they often possess three traits:

1. they can be "low self-monitors," they don't care how others perceive them

2. they usually avoid contact with co-workers, preferring to work alone, and

3. they tend to have high self-esteem, can be a pain to work with, don't play well on teams, don't care about your opinion, and come across as arrogant

JB: How do individuals and companies become better problem solvers?

BB: At the individual level, Malcolm Gladwell was right. If you want to get good at something, practice, practice, practice. People who are good problem solvers do a lot of it. Solving a difficult problem will boost these people's sense of self-worth. Certainly some people are born with brains that can solve some problems well, yet are completely unable to understand other problems. Think of someone great at math and logic problems, but not so good at figuring whether someone is frowning because they're angry or confused. Everyone is good at some kind of problem solving, you just have to create the environment where they're enabled.

At the company level, you get better first, by making sure people are all fully engaged. Then you need structure to create accountability around delivery behavior. We actually reverse these, structure first, engagement second. The thing about engagement, is standard approaches don't work. I'm always surprised when the leading 'scientist' in the leading employee engagement firm points out only a few companies put forth the effort and success in getting upwards of 70% of their employees fully engaged. This is supposed to be a great result! Where I went to school, anything under 70% is an 'F'!

Why do we listen to people who delight in getting an 'F'? Especially when there are companies that get all their workers fully engaged. Companies like Semco, Morning Star, Valve Corporation and Gore. What they do really well, isn't some action that's designed to engage workers. Rather, they stop disengaging workers.

Over and over again, history has shown us that if you just let them, 99% of workers will be self-motivated. Of course, the obstacle is a big one. However, it's easy to overcome if you have the will to do so, and impossible if you don't.

The discussion to understand this obstacle is a long one. It boils down to this: the hierarchical management structure most companies use, creates a parent-to-child dynamic that undermines the subordinate's sense of identity. Earlier I talked about the supersynthesizer and their high level of self-esteem. Playing the child role is an affront to self-esteem. Identity is a big motivator. A subordinate who's repeatedly forced to interact with someone who takes the parent role, whether it's scolding, correction, instruction, or praise, will lead to the subordinate becoming disengaged.

Lots of employee engagement experts recommend management do lots more recognition. This is bad advice. It's just too much parenting. The best thing you can do is ban parenting at the workplace. If you want to maximize your operating margin and spur top-line growth, you'll want to replace hierarchical accountability with peer-to-peer accountability.

JB: What talent(s) are crucial for creating success?

BB: Harry Truman said, "It's amazing what you can accomplish if you don't care who gets the credit." The trouble is, we are all scorekeepers. We haven't yet figured out this problem of needing to take credit for something.

But by implementing a team based peer-to-peer accountability structure we go a long ways to ameliorating it. We think what's crucial for a company is its sense of team. For a team to function well, we want to confirm three things about each team member:

- First, they have to thoroughly understand what they're getting themselves into.

- Second, they must desire the job.

- Third, and this has something to do with talent, they must be able to master the tasks.

We use a process similar to what Gino Wickman describes in his book Traction, to make sure every member of the team answers 'yes' to all three questions when we ask them about themselves and every other team member. Then you need a structure that bakes-in peer-to-peer accountability and ensures the team is highly motivated. We use a methodology that results in a short document, like a contract among team members, the Colleague Letter of Commitments™. Morning Star in California uses a similar method with incredible success.